Opinion
Case No. 10-CV-1652 (FB) (VVP).
February 1, 2011
RICHARD D. KING, NATHAN A. TILDEN, JASMINE GARCIA-VIEUX, MICHAEL W. WHITCHER, Smith Brink PC, Garden City, NY, Attorneys for the Plaintiffs.
MARK L. FURMAN, Hoffman Polland Furman PLLC, New York, NY, Attorney for the Defendants David Levy a/k/a Dima, Best Star Advertisement Corp. and United Medical Billing Collection Corp.
RAYMOND D. RADOW, Radow Law Group, Great Neck, NY, Attorney for the Defendant Alex Levy a/k/a Sasha.
ALBERT Y. DAYAN, Law Office of Albert Y. Dayan, Kew Gardens, NY, Attorney for the Defendant Hoi Yat Kam, M.D.
ROBERT KOPPELMAN, New York, NY, Attorney for the Defendant Salvatore Lentini, D.C. and Align Chiropractic Care, P.C.
SCOTT B. TULMAN, Law Offices of Scott B. Tulman, New York, NY, Attorney for the Defendants Yan Yan a/k/a Angela and Tai Ji Acupuncture, P.C.
HAROUTYOUN TIKRANIAN, D.C., Bridgeport, CT, PRO SE, Attorney for the Defendants Haroutyoun Tikranian, D.C. and Comfort Chiropractic Care, P.C.
NEIL S. TORCZYNER, STEVEN J. HARFENIST, Friedman, Harfenist Langer, Lake Success, NY, Attorneys for the Defendants Lai Fan Xue a/k/a/ Lisa, Cheng He Su and QI Bao Acupuncture, P.C.
BRUCE S. ROSENBERG, Rosenberg Law, P.C., Bellmore, NY, Attorney for the Defendant Aleksandra Gashinskaya, M.D.
ANDREW C. LAUFER, Law Office of Andrew C. Laufer, PLLC, New York, NY, Attorney for the Defendant Desmond Connell.
DENIS P. KELLEHER, Denis Patrick Kelleher, Esq., PLLC, New York, NY, Attorney for the Defendant Mary Jimenez.
MEMORANDUM AND ORDER
Plaintiffs brought this suit to recover no-fault insurance benefit payments made to defendants — various medical facilities ("medical PCs") and the individuals who run them — because the medical PCs were not incorporated, owned and operated by medical providers, as required under New York law. On April 14, 2010, plaintiffs moved for a prejudgment order of attachment against defendants' real and personal property. After holding a show cause hearing on April 23, 2010 and declining to order attachment on defendants' property at that time, the Court referred the motion to Magistrate Judge Viktor V. Pohorelsky ("MJ Pohorelsky") for a report and recommendation ("R R").
On December 29, 2010, MJ Pohorelsky issued an R R denying plaintiffs' motion because plaintiffs had not sufficiently shown that defendants had — with intent to defraud creditors or frustrate the enforcement of a judgment — assigned, disposed of, encumbered or secreted property, or removed it from the state. See N.Y. C.P.L.R. § 6201(3). Plaintiffs timely objected to the R R. For the reasons that follow, the Court adopts the R R in its entirety.
MJ Pohorelsky determined that plaintiffs had satisfied the other three requirements necessary for an order of attachment to issue under New York law: (1) plaintiffs have a claim for money damages; (2) plaintiffs will probably succeed on the merits; and (3) the amount they demand exceeds the amount of any counterclaims made by the defendant. See Silverman Partners, L.P. v. First Bank, 687 F. Supp. 2d 269, 293 (E.D.N.Y. 2010).
District courts "must consider timely objections and modify or set aside" any part of a magistrate judge's non-dispositive pretrial order that "is clearly erroneous or [] contrary to law." Fed.R.Civ.P. 72(a); see 28 U.S.C. § 636(b)(1)(A). An order is "clearly erroneous" when the reviewing court is "left with the definite and firm conviction that a mistake has been committed." United States v. DeSilva, 613 F.3d 352, 356 (2d Cir. 2010); an order is "contrary to law" when it "'fails to apply or misapplies relevant statutes, case law, or rules of procedure.'" Field Day, LLC v. County of Suffolk, No. 04-CV-2202, 2010 WL 5490990, at *2 (E.D.N.Y. Dec. 30, 2010) (quoting Weiss v. La Suisse, 161 F. Supp. 2d 305, 320-21 (S.D.N.Y. 2001).
Plaintiffs argue that MJ Pohorelsky incorrectly required evidence of defendants' " present intent to defraud creditors or frustrate the enforcement of a judgment[,]" when evidence "that a defendant secreted property before the lawsuit was filed — or before their illegal conduct became the subject of investigation" — is sufficient under New York law. See Pls.' Objection at 4. Plaintiffs correctly state the law, but distort MJ Pohorelsky's reasoning. MJ Pohorelsky reasoned that payments by the medical PCs as "management fees" to the management companies owned by defendant Daniel Levy
occurred before this lawsuit was filed, and indeed prior to the defendants' knowledge that their conduct was being investigated by law enforcement authorities, so they provide little, if any, evidence of an intent to frustrate the enforcement of any judgment that may be rendered in this case. Indeed, the intent with which the defendants appear to have acted in connection with those transactions was not to defeat creditors or the collection of a judgment, but rather to hide the fact that substantial sums generated by the operation of the medical PCs were ending up in the hands of a person who was not a licensed medical professional.
R R at 3-4. Thus, MJ Pohorelsky did not require evidence of defendants' present intent to defraud creditors; he correctly applied the statute and determined that the proffered evidence was insufficiently probative of defendants' intent — past or present.
Plaintiffs also object to MJ Pohorelsky's determination that plaintiffs "have submitted no evidence to suggest that the payment of the management fees defrauded any creditors of any of the defendants, or was intended to do so." R R at 4 n. 1. Plaintiffs argue that because defendants' were operating in violation of New York law, plaintiffs "obtained creditor status at the time payments were made" to the medical PCs and are, thus, defrauded creditors. Pls.' Objection at 5. Be that as it may, MJ Pohorelsky determined that the defendants' intent with regard to the management fees was to perpetuate the fraud, not to "frustrate the enforcement of any judgment that may be rendered in this case." R R at 4.
CONCLUSION
Magistrate Judge Pohorelsky's R R is adopted in its entirety.SO ORDERED.
Brooklyn, New York
January 31, 2011